TAMPA, Fla. — A shrinking broadcast business led to another drop in revenues for Eutelsat as the French satellite operator edges closer to merging with OneWeb, the low Earth orbit (LEO) constellation set to boost its shift into connectivity services.
Eutelsat posted 272 million euros ($295 million) in total revenues for the three months ended March 31, down 7.5% year-on-year when adjusted for currency changes on a like-for-like basis.
Broadcast sales fell 10.6% to 157 million euros as sanctions against Russian and Iranian channels added more challenges in a gradually declining satellite TV market.
Revenues for its smaller government services business also fell 13.4% to 31 million euros, which Eutelsat said was partly due to a decline in U.S. Department of Defense contract renewals that it expects to improve later this year.
However, fixed broadband and mobile connectivity sales climbed 7.3% and 23% to 18.5 million euros and 26.9 million euros, respectively, sustaining positive momentum ahead of two new high throughput geostationary satellites set to enter service in the second half of 2023.
Eutelsat has been investing heavily in connectivity services as part of a growth strategy that saw it announce plans last year to merge its geostationary network with U.K.-based OneWeb’s LEO constellation.
The merger is on track to complete this summer, Eutelsat CEO Eva Berneke said during a May 11 earnings call with analysts, pending regulatory approvals and a shareholder vote.
The commercial arm of India’s space agency launched the final batch of satellites OneWeb needs to provide commercial broadband services globally in March, which Berneke said fully de-risked the project.
She said 22 ground network portals had been for the constellation, and another 18 are on track to be installed by the end of this year to enable global commercial services by January 2024.
OneWeb’s network currently represents around 450 gigabits per second (Gbps) of capacity, mainly limited to the upper region of the northern hemisphere, and is slated to reach 1,300 Gbps after bringing global coverage online.
While Eutelsat expects OneWeb to have generated only $50 million in revenues for the 12 months to June 30, Berneke said the LEO operator has an order backlog of $900 million — up $300 million from October.
OneWeb has signed deals with 53 distributor partners to date and is seeking to expand this to 75 this year.
According to Berneke, the LEO operator could also help Eutelsat play a role in IRIS², Europe’s proposed multi-orbit broadband constellation also known as Infrastructure for Resilience, Interconnectivity and Security by Satellite.
Eutelsat announced May 2 it had partnered with other established space companies to jointly bid to develop the 6 billion euro ($6.6 billion) project.
The British government will continue to hold priority voting rights in OneWeb following the Eutelsat merger, complicating its plan to join Europe’s sovereign network post-Brexit.
However, Berneke said their merger deal includes a clause enabling Eutelsat to carve British government control out of a part of OneWeb’s second-generation constellation.
Work is set to begin next year on OneWeb Gen 2, which Berneke said would have three to five times more capacity than Gen 1 and use fewer but bulkier satellites.
By leveraging the French operator’s geostationary network in high-demand areas, Eutelsat expects Gen 2 would be a constellation of around 300 satellites, roughly half the number of 150-kilogram satellites in OneWeb’s Gen 1 system.